OSCA, Residential, Investment
New businesses and those with their lease coming up soon may find themselves at a crossroads in deciding what the best decision is when it comes to finding an office space. Renting or buying is an age-old question and one which requires you to understand the situation of your business and your ambitions and goals to decide.
Renting offers the most flexibility, meaning businesses are not tied to the location or size of their office, ideal for those expecting changes in their current arrangement. There is little to no property maintenance needed for renting as everything would be handled by the landlord (Note: This obviously excludes maintenance of your own office and facility, which you will shoulder.). This frees up working capital as money would not get tied up in the real estate, letting businesses put their money as capital for operations.
Through renting, businesses can establish themselves in a prime location without the need to shell out money in buying an office, thereby boosting their image. Renting gives businesses a chance to be in close quarters with other specialists and practitioners, granting them the chance to build meaningful relationships.
Cons of renting
The downsides to renting include the variable cost of rent—as property prices get higher due to recent developments and through appreciation, rent naturally increases along with it. Renting also means not being able to build equity with the property. Lastly, there would be limitations in the customization of the office spaces as these should abide by the stipulations in the rental contract.
Pros of buying
One of the biggest advantages when it comes to buying an office space is the fixed cost—this can grant businesses clear costs for the long term. Office owners can also build equity especially as the property increases in value over the years, doubling as a good investment. Hence, if the unit owner would opt to discontinue the use of their office space, it is highly likely that they can sell this at a higher price.
Another way businesses can gain additional income is by renting out extra office space which can be used to help fund their mortgage or other business expenses. This is great for those who would buy more space than they need and just rent out the unused space until they would actually be needing it. Businesses can have the freedom to remodel and upgrade their space to suit their tastes without worrying about the rules put in place by the landowner.
Cons of buying
Owning property include managing its maintenance—an activity needing both time and money and in some cases, the help of a property manager. High upfront costs are also a trademark of buying an office space from appraisal, down payment, maintenance, and improvement costs.
To buy or rent: the verdict
The right answer to this age-old question is that it depends on your business’s goals, finances, and the current real estate climate. Get an expert’s opinion to help you come to your next big real estate decision. Santos Knight Frank is a real estate agency with a great track record of serving clients with services such as occupier services & commercial agency, investment & capital markets, residential & sales leasing, property marketing, research & consultancy, valuation & appraisal, project management, asset management, property management, facilities management, technical services & engineering solutions. Learn more about Santos Knight Frank through the website https://santosknightfrank.com/.
If you want to know more about Office Properties, you can also read about Deciding between a serviced office or a conventional office space.